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After failed Obamacare replacement, California insurance market faces uncertainty




WASHINGTON, DC - JULY 13:  Senate Majority Leader Mitch McConnell (R-KY) walks to a meeting of Republican senators where a new version of their healthcare bill was scheduled to be released at the U.S. Capitol July 13, 2017 in Washington, DC. The latest version of the proposed bill aims to repeal and replace the Affordable Care Act, also knows as Obamacare. (Photo by Win McNamee/Getty Images)
WASHINGTON, DC - JULY 13: Senate Majority Leader Mitch McConnell (R-KY) walks to a meeting of Republican senators where a new version of their healthcare bill was scheduled to be released at the U.S. Capitol July 13, 2017 in Washington, DC. The latest version of the proposed bill aims to repeal and replace the Affordable Care Act, also knows as Obamacare. (Photo by Win McNamee/Getty Images)
Win McNamee/Getty Images

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The latest attempt to repeal and replace Obamacare has hit a brick wall. Senate Republicans failed to secure the 50 votes needed to pass its healthcare bill Monday. Senate Majority Leader Mitch McConnell is signaling that, for now, he'll focus efforts on just repealing the Affordable Care Act. 

It's a sentiment shared by President Trump, who tweeted his thoughts Monday: "Republicans should just REPEAL failing ObamaCare now & work on a new Healthcare Plan that will start from a clean slate."

All this uncertainty is rocking the health insurance exchanges, including in California. Chad Terhune, a senior correspondent at California Healthline and Kaiser Health News, explains how Covered California might be affected.

What a repeal-only health care bill might look like

The Congressional Budget Office has looked at 'repeal-only' and they said it would be 32 million people more without insurance. In California, that could be 4 to 5 million people. Just for comparison, the Senate health bill was about 22 million losing coverage.

Quotes edited for clarity and brevity.

Why would a repeal-only bill seems like a good option

Some Republicans just want to have that vote to take back to their districts because remember this has been a 7-year-long campaign promise to repeal the Affordable Care Act. Some conservatives want to take that vote and send it to President Trump, but practically speaking you've seen many Republicans have no interest of repeal-only and setting this date of two years from now we'll come up with a replacement.

The risk of postponing an ACA replacement

Republicans can't agree on a replacement plan and that's putting a lot of risk of doing repeal and putting it down on the horizon. The insurance markets would start to get rattled even more with this two year date down the road. You could have more insurers exiting. You could have rates going up even more. You could have that dreaded death spiral that everyone talks about with health insurance rates. So I think Republicans, particularly in the Senate, are saying repeal-only is not a winning strategy.

The tug-of-war between insurance companies and state exchanges

I think what would calm the markets right now is up to the Trump administration. There are mandates, a requirement to have health care. The Trump administration has said they're not going to enforce that. Cost sharing subsidies help people with their co-pays and deductibles and Trump has said we're not going to keep paying these subsidies. That's what's making insurance companies and state exchanges really nervous.

What happens to Covered California

California has held up pretty well under during this whole uncertain legislative debate. We haven't had any big insurance companies exit so far. We are getting ready to see what rates will be in 2018. There could be big rate hikes here in California. It could be anything from 10 percent to 20 percent to 30 percent because of all this uncertainty.

Quotes edited for clarity and brevity.